Relief for homebuyers as GST on under-construction flats slashed to 5%
NEW DELHI, Feb 24: The GST Council on Sunday slashed tax rates on under-construction housing properties to 5 per cent without input tax credit, from the existing 12 per cent, Finance Minister Arun Jaitley said.
The Council also cut Goods and Services Tax (GST) rates on affordable housing to 1 per cent from the current 8 per cent and expanded the scope of affordable housing to those costing up to Rs 45 lakh and measuring 60 sq metre in metros and 90 sq metre in non-metro cities. The new tax rates will come into effect from April 1, 2019.
Currently, the GST is levied at 12 per cent on payments made for under-construction properties or ready-to-move-in flats where completion certificate has not been issued at the time of sale.
However, builders will not be able to claim input tax credit (ITC) under the new GST rates. “This (GST reduction) decision will certainly give boost to construction sector,” Jaitley told reporters. However, Goods and Services Tax (GST) is not levied on real estate properties for which completion certificate has been issued at the time of sale.
With regard to lotteries, the GST Council, however, deferred its decision with Jaitley saying that the Group of Ministers (GoM) will meet again to discuss the proposal.
Currently, state run lotteries attract 12 per cent GST, while state-authorised ones attract 28 per cent.
RBI makes surprise cut in interest rate, home loans could get cheaper
NEW DELHI, Feb 7: The Reserve Bank of India’s monetary policy committee on Thursday reduced the policy interest rate by 25 basis points to 6.25 %, a move that could lead to banks reducing lending rates for consumer and home loans.
At the committee’s meeting, the first after Shaktikanta Das took over as the central bank’s Governor, also changed its stance to ‘neutral’ from the earlier ‘calibrated tightening’.
The six-member monetary policy committee voted 4:2 in favour of the rate cut, while the decision to change policy stance was unanimous. Deputy Governor Viral Acharya and another MPC member, Chetan Ghate, voted for status quo in interest rates, while Shaktikanta Das and three others voted for a cut in interest rates.
The monetary policy committee said the rate cut is in consonance of achieving the medium term objective of maintaining inflation at the 4 per cent level while supporting growth.
“Investment activity is recovering but supported mainly by public spending on infrastructure,” said the MPC. “The need is to strengthen private investment activity and buttress private consumption.”
The Indian financial markets gave up some gains while 10-year bond yields slid 5 basis points after the surprise rate cut. The rupee weakened to 71.69 to the dollar immediately after the announcement but did strengthen to 71.42 soon.
The last rate cut by the RBI, to 6.00 percent, was in August 2017.
The central bank’s surprise cut in interest rate could work well with the Narendra Modi government at the Centre which wants to boost growth in an election year.
The BJP led national alliance is already in poll mode and announced several sops at its interim budget on February 1. Finance Minister Piyush Goyal rolled out the government’s last budget ahead of this year’s national elections, announcing no tax on income up to Rs 5 lakh, a Rs 75,000 crore assured income scheme for small farmers and a mega pension scheme for workers in the unorganised sector.
Taiwan achieves 10th ranking in global economic freedom index
By Deepak Arora
TAIPEI, Feb 1: Taiwan ranks 10th out of 180 economies around the world in the latest Index of Economic Freedom released January 25 by Washington-based think tank The Heritage Foundation, marking its best ever result in the annual report.
With a score of 77.3 out of 100, Taiwan rose three spots from the previous edition and was categorized as “mostly free.” Among the 43 economies in the Asia-Pacific, Taiwan was fifth, ahead of South Korea, 29th; and Japan, 30th.
Hong Kong, Singapore, New Zealand, Switzerland, Australia and Ireland topped the survey in that order and were the only six economies classified as “free.” A total of 29 economies were rated “mostly free,” 59 “moderately free,” 64 “mostly unfree” and 22 “repressed.”
Of the 12 benchmarks used to assess an economy under the policy areas of government size, open markets, regulatory efficiency and rule of law, Taiwan did particularly well in business freedom, scoring 93.2 and trailing only Hong Kong globally. It also outperformed in fiscal health, government spending and trade freedom, and demonstrated strong improvement in labor freedom following 2017 amendments to the Labor Standards Act.
According to the 25th edition of the report, Taiwan is a dynamic, multiparty democracy characterized by an independent judiciary and a sound legal framework providing protection of property rights and upholding the rule of law.
Describing the local economy as one of the richest in Asia, the index attributed Taiwan’s economic expansion to small and medium enterprises. The well-developed commercial code and open-market policies also facilitate the flow of goods and capital, it said.
To increase the nation’s economic openness and strategic competitiveness, the report recommended reducing government involvement in export industries and boosting regulatory easing of the financial sector.
In its response later the same day, the Cabinet-level National Development Council said the results show that wide-ranging government efforts to advance economic development are paying dividends and gaining global recognition.
The NDC added that it will continue working with all relevant agencies to address issues of concern identified in the report and implement further regulatory easing to expand economic freedom.